The Federal Maritime Commission is expected to decide later this week whether to allow the dozen container terminal operators in the Ports of Los Angeles and Long Beach to move forward with their plans to revise PierPass’s OffPeak program or seek additional information about the planned changes.
The FMC can seek to block changes to agreements if it feels they will result in an unreasonable reduction in transportation service or an unreasonable increase in transportation cost, but this a power it has only attempted to use once — and then unsuccessfully.
Last month, the terminals, through their West Coast Marine Terminal Operator Agreement (WCMTOA), filed amendments to their FMC agreement they believe will improve service levels at container terminals in the San Pedro Bay complex. In a nutshell, the plan calls for replacing a program that encouraged shippers to pick up and deliver containers at night or on Saturday by charging a fee if they came during weekdays. Instead, under the proposed changes, PierPass would collect a lower flat fee around the clock and spread out port traffic day and night by requiring shippers to have a reservation in order for their truckers to transact business at the marine terminals. In both cases, PierPass says the fees are used to help fund the cost of terminals staying open for extended hours.
While the existing program has succeeded in moving about half of the truck traffic at the two ports to nights or weekends, some shippers have long bristled at the PierPass fees and questioned why the terminals don’t just collect the money they need from the container lines that are their customers rather then shippers.
The FMC has released several new letters on the proposed changes.
Two members of Congress, Reps. Alan Lowenthal and Nanette Diaz Barragan said they supported the change, saying it “will allow for a common approach for appointment systems to address congestion at the Ports of Long Beach and Los Angeles.”
Lou Anne Bynum, president of the board of harbor commissioners for the Port of Long Beach, said the flat fee “will serve to minimize excessive queuing between shift changes, remove the disincentive from performing the ‘loaded’ portion of a dual transaction during the day shift and better balance the funding gap that terminal operators have reported exists under the current program.”
She noted both her port and the Port of Los Angeles are working with General Electric on a user information portal that “could potentially aid shippers in scheduling appointments across terminals” but that it was “equally important for the terminals to adopt a common set of business rules for appointments across the San Pedro Bay complex. More importantly, the port-wide appointment system needs to be structured in a way that incentivizes the use of night gates.”
She asked the FMC to consider extending its review period “to ensure the concerns raise by the cargo owners are addressed prior to implementation of WCMTOA’s amendment.”
However, David Davis, senior director of inbound logistics at Target, said the retailer opposed the amended agreement, “not based on costs, but on concerns that road congestion will not be alleviated and the intent of the PierPass program is fundamentally altered by this change to a flat-fee charge. If there are additional costs, we believe it is best addressed during direct contract negotiations between parities.”
FMC should reject the WCMTOA amendment and “consider a sunset of the program to be timed with a fully integrated and operational appointment system operated by the marine terminal operators,” he said.
“This flat-fee pricing model removes the incentive to use evening appointments, a time when fewer people are on the road, and we believe will increase traffic during the daytime hours — a problem PierPass was established to solve.”
With appointments and a pilot plan to make appointment systems interoperable, he said, “the need for PierPass has gone away. It has simply turned into a per-container fee, adding to the cost of doing business at these ports with a murky understanding of what the fees are contributing to.”
John Cushing, the president and chief executive officer of PierPass, agreed that the original OffPeak program “was set up to address congestion and we have been successfully mitigating it.”
But Cushing said with the new program, congestion will continue to be alleviated with appointment systems and that the California Trucking Association and Harbor Trucking Association believe by eliminating bunching or queuing of trucks between shift changes “it will flatten out the flow of traffic even more.”